Correlation Between Superior Plus and Moodys

Can any of the company-specific risk be diversified away by investing in both Superior Plus and Moodys at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Superior Plus and Moodys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and Moodys, you can compare the effects of market volatilities on Superior Plus and Moodys and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Superior Plus with a short position of Moodys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Moodys.

Diversification Opportunities for Superior Plus and Moodys

-0.51

Correlation Coefficient

Superior Plus  Moodys

Excellent diversification

The 3 months correlation between Superior and Moodys is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys and Superior Plus is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Superior Plus Corp are associated (or correlated) with Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of Superior Plus i.e., Superior Plus and Moodys go up and down completely randomly.

Pair Corralation between Superior Plus and Moodys

Assuming the 90 days horizon Superior Plus Corp is expected to generate 1.16 times more return on investment than Moodys. However, Superior Plus is 1.16 times more volatile than Moodys. It trades about 0.03 of its potential returns per unit of risk. Moodys is currently generating about -0.03 per unit of risk. If you would invest  406.00  in Superior Plus Corp on December 30, 2024 and sell it today you would earn a total of  12.00  from holding Superior Plus Corp or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Superior Plus Corp  vs.  Moodys

Superior Plus Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Plus Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Moodys

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moodys has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Moodys is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Superior Plus and Moodys

The main advantage of trading using opposite Superior Plus and Moodys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Moodys can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Moodys will offset losses from the drop in Moodys' long position.

The idea behind Superior Plus Corp and Moodys pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.